Local Alchemy – Reinventing local economies – an East Midlands experience

Contributed Paper: CommEnt Research Symposium 2006 Hanmer Springs, South Island, New Zealand

Local Alchemy: Reinventing local economies: an East Midlands experience. Davies, S. J. and Davies, D. H.

Local Alchemy: Reinventing local economies: an East Midlands experience. Sarah Davies and Dafydd Davies

Abstract Effective local governance has a vital role to play in tackling social, economic and environmental problems. It calls for a new localism - a strategic approach to allow local communities and regions to involve themselves in the decisions that effective their social, economic and political environment. In a global world and one where national governments continue to have a key role a nested but powerful role for local governance remains an attractive option. Across Great Britain, a huge amount of emphasis and energy are placed on the economic regeneration of disadvantaged areas. Often this takes the form of large-scale regeneration initiatives that do not fully meet local needs, or address the underlying causes of economic disadvantage. In many places, local energy and creativity becomes trapped, and different parts of the economy - local businesses, voluntary sector agencies, and the public sector - do not talk to each other to maximise local opportunities. For the local economy to undergo durable and robust change, the capability and energy of everybody needs to be harnessed. This is done by working with organisations in the statutory and voluntary sectors to focus on the needs of enterprise in the most deprived areas; by encouraging businesses to create strong positive economic linkages to enterprises in these areas; by increasing economic literacy amongst residents; and by encouraging other stakeholder groups to put the local economy higher on their agenda, and to do things differently as a result. This paper outlines some of the arguments for new localism and describes a new approach developed in the East Midlands of England to maximise local opportunities. The Local Alchemy programme is about helping areas experiencing economic disadvantage to 'get back in the economic loop' by making their local economy stronger and more robust. Local Alchemy aims to increase economic activity in an area through quantitative differences such as more jobs, stronger businesses and social enterprises, improved facilities and better access to advice and support. It does this by building a mindset of can-do attitude and collaboration. 1.0

Introduction

This paper argues that effective local governance has a vital role to play in tackling social, economic and environmental problems. It advocates for a new localism - a strategic approach to local decision making - to allow local communities and regions to involve themselves in the decisions that effect their social, economic and political environment. In a global world and one where national governments and regions

continue to have a key role a nested but powerful role for local governance is a priority. The first section of the paper sets out the arguments for new localism. The second section of the paper argues that if localism is going to be powerful and meaningful it needs to be constructed in a way that enables, if they wish, local citizens to actively engage in decision-making. It goes onto outline the role of economic inclusion policy and explains the concepts behind the East Midlands economic development inclusion plan. The final section of the paper outlines the development of the Local Alchemy programme by the East Midlands Development Agency (emda) and the New Economics Foundation (NEF) as an economic inclusion tool to reinvent local economies. 2.0

New Localism: an emerging governance principle

New Localism can be characterised as a strategy aimed at devolving power and resources away from central control and towards front-line managers, local democratic structures and local consumers and communities, within an agreed framework of national minimum standards and policy priorities (Corry and Stoker, 2002; Corry et al, 2004). In short it represents a practical response to a significant challenge: how to manage a substantial variety of state service provision and interventions in a world that defies the application of simple rule-driven solutions, and where the recipient of the service has to be actively engaged if the intervention is going to work. Building a road or providing electricity is a task that requires of level of state capacity in building a better environment for citizens. Creating the conditions for a community to achieve their potential requires a rather different and more subtle capacity. The case for New Localism rests on three grounds. First it is a realistic response to the complexity of modern governance. Second it meets the need for a more engaging form of democracy appropriate to the 21st century. Third New Localism enables the dimensions of trust, empathy and social capital to be fostered and as such encourages social capital and civil renewal. The case against New Localism rests around concerns about local decision making either failing in some way or leading to more inequitable outcomes. 2.1

Complexity

There are very few problems confronting communities today that have simple solutions. Protecting the environment, creating a sound economy, sustaining healthy communities or helping to prevent crime all require a complex set of actions from people and agencies at different spatial levels and from different sectors. It would be nice to argue that we should stop doing complexity and instead think about simplicity. That might wash in a self improvement book but when it comes to running the business of a modern society the attraction of simplicity is false. As the saying goes ‘to every complex problem there is a simple answer and it is always wrong’. We need to find ways of living with complexity. We need to understand any problem or issue in its multiple dimensions and find mechanisms that enable us to not get swamped by complexity but to deal with it effectively. That is where the message of New Localism

has got something to offer. The path to reform is not to allow local institutions complete autonomy or equally to imagine that the centre can steer the whole of the government system. We need a form of central-local relations that allows scope for all institutions to play an active role and we need to find ways of involving a wider range of people in the oversight of the services that are provided through public funds and in the search for solutions to complex problems (Corry and Stoker, 2002). Complexity comes in a range of forms: structural, technical or over the allocation of responsibilities. Indeed as Saward (2003) notes “one of the key challenges to democracy today lies precisely in the sheer complexity of modern government and governance”. Complexity is inevitable because of the range of activities that governments and public services are now engaged in; as a result there are a lot of organisations involved in delivery. Governing operates a range of levels and through a range of organisations. Complexity also results from the sheer technical difficulty of what we now attempt to do in the public sphere. We have moved from hard-wiring challenges to a concern with soft wiring society. It was enough of a challenge to build schools, roads and hospitals and ensure the supply of clean water, gas, electricity and all the requirements of modern life. What does New Localism deliver in the light of complexity? New Localism is attractive because it is only through giving scope for local capacity building and the development of local solutions, in the context of a regional framework, that we can hope to meet the challenge posed by these complexities. The solution to complexity is networked community governance because it is only through such an approach that local knowledge and action can be connected to a wider network of support and learning. In that way we can get solutions designed for diverse and complex circumstances. 2.2

Engaging Participants

To commit to New Localism means recognising that conventional understandings of democracy are valuable but limited. We can agree that several of the features of conventional vision of democracy remain essential: the protection of fundamental citizen rights and freedom of organisation and assembly for groups and individuals. We need different answers to two fundamental questions: what are the building blocks of democracy and what is the nature of accountability. The conventional answer to these two questions sees the nation state, regions and central government as the ultimate and indeed prime building blocks of democracy and accountability as led by elected representatives being held to account by their electorates. This top down view of democracy is not appropriate when we think about making democracy work in our complex societies (Lowndes, Pratchett and Stoker 2001). New Localism draws in broad terms from the ideas of associative democracy advocated by Hirst (2000), he offers three essential insights. First, that democracy must have a strong local dimension; the core institution of democracy is not the nation state. Democracy is made real through its practice at local, regional and international levels as well as the level of the nation state. More than that, central government should be an enabler, regulator and maybe a standard setter but not a direct provider nor the level for coming to judgements about detailed directions or the substance of services. Second, that provision itself must be plural through a variety of

organisations and associations so that everyday citizens have an opportunity to be involved in decisions about services and judge the capacity of different institutions to deliver. Third, democracy can be organised through functional as well as territorial forms. 2.3

Building Social Capital and the Capacity for Civil Renewal

One key area where this new vision of democracy has the potential to deliver is with respect to the hidden social fabric of trust, social capital and citizenship that make a key contribution to tackling the complex service and policy issues that we now face (Putnam, 2000). We need to find ways in which these resources among ordinary citizens can be fostered and replenished. A local approach has the potential to be centrally important in developing these resources. We know that involvement and exchange are the crucial ways in which trust and social capital are created and sustained. A democracy of strangers loses these dimensions yet both trust and social capital are essential for encouraging the commitment and providing the glue that allows solutions to complex problems to be identified and followed through. Trust and the sense of shared values, norms and citizenship that is encouraged through social capital can make people willing to go the extra mile in the search for solutions; it can enable agreements and collective action. A local dimension to governance can draw particularly effectively on these social dimensions of decision-making. The essential insight of social capitalists is that the quality of social relations makes a difference to the achievement of effective outcomes when it comes to activities that involve complex exchange of ideas and the co-ordination of a variety of actors. To buy a loaf of bread requires little in the way of intensity of social relations but to come to a judgement about the use of open space in a community, or to take on the commitment for a project to clean up the local environment does require effective networks of information flow, trust and some shared norms. Local or community governance can deliver that capacity and help to meet challenges that top-down government simply lacks the strength of social relations to deliver. The social capital debate is driven by the values of solidarity, mutuality and democratic self-determination. That ethos in turn leads to strategic interventions by the state, in partnership with civil society, in three areas: the promotion of active citizenship ( through better understanding of what works, education and providing new opportunities), the strengthening of communities (through community development and cohesion strategies) and the practice of partnership in meeting public need ( in service delivery). This active intervention which could be characterised as a strategy of social capital and civil renewal is required because the forces of globalisation and technological change have challenged traditional forms of community and participation and in part contributed to the development of a thin, consumerist civic realm that is undermining the relationship between government and citizens (Stoker and Greasley, 2004). Building social capital is about giving people a stronger sense of involvement in their communities and a greater say over their lives. The greater sense of efficacy and autonomy it offers people combines rights and responsibilities. People have rights to: respect for themselves, a quality of life, decent public services and the opportunity to influence their environment. But equally they have responsibilities to respect others,

make a contribution to supporting their environment and their fellow citizens and to engaging in and accepting as legitimate the outcomes of the democratic process. The dual character of the social capital and civil renewal agenda makes it ultimately a philosophy of community governance. Governance arrangements are very familiar to us in public, commercial and voluntary settings. They are the rules and procedures that explain and justify the making of collective decisions in the institutions or communities to which they apply. The rules of decision making present to the relevant stakeholders certain rights, but at the same time also certain obligations. They set out procedures for resolving disputes and getting to a legitimate decision. Civil renewal in the light of this insight is not just there to enable people to participate more rather it demands participation with a purpose (Stoker 2003). That purpose is to engage people in making their communities better places both for themselves and for those around them. To make these governance rules real and capable of being achieved in practice may require active intervention, support, training and resources from government and other agencies. The ultimate goal should not then be confused with simple community engagement or empowerment. Nor is about encouraging people to live in tolerance with others or feel a greater sense of neighbourliness, although such ambitions may be achieved through civil renewal. The aim is both more specific and more profound. It is to establish and make workable a set of rules about the way in which communities make decisions about public services and the condition of their physical, social and ecological environment. The agenda is about achieving a shift in the focus and operation of decision making. It means more decisions taken locally and more community involvement in making decisions in the public interest. It does not mean an end to decision making responsibility at other levels or of other forms. It is about a shift in the balance between, respectively, national and local, representative and participative and self-regarding and other-regarding politics. 2.4

Competence and Equity Concerns

There are two common grounds for objecting to local decision-making. One line of argument is that the perspective of communities is inherently limited and limiting. The danger of too much local decision-making is that it opens up too much decision making to the parochial concerns of narrow-minded individuals and threatens the ideas and practice of a wider welfare politics (Corry 2004). Behind the romantic notions of community lurks a real world of insular, ‘not in my own back yard’ politics. Most forms of progressive politics need a wider canvass than local politics can provide, it is argued. The second objection is that if the problems faced by communities are going to be addressed there is a need for interventions to address the inequalities faced by particular communities. To tackle inequality requires national or even international intervention and creating more scope for local decision-making simply helps to foster or even reinforce existing inequalities. Rich areas will stay rich and poor areas will be allowed the freedom spend non-existent resources on addressing the problems they confront (Corry and Greasley 2004). It is precisely because of recognition of these concerns that ‘new’ is added to the localism advocated outlined in this paper. New Localism is crucially set in the context, for the East Midlands, in a regional framework setting and funding. Indeed the localism that is advocated is part of a wider system of

multi-level governance. Moreover there is nothing in New Localism that means that is simply assumes that local politics is automatically devoid of the tensions that characterise politics at other levels. Conflict between interests and the resolution of those conflicts remain at the heart of politics wherever it is conducted. Localism does not imply a sort of romantic faith in communities to come up with solutions for the common good. Nor it incompatible with a redistribution of resources provided through the power of higher levels of government. The argument for New Localism is an argument for a shift in the balance of governance, one that allows more scope for local decision making and local communities. It is premised on the idea that involving people in the hard, rationing choices of politics in the context of a shared sense of citizenship is a way of delivering a more mature and sustainable democracy. It is also based on the idea that meeting the challenge of equity does not mean treating all communities or individuals the same but rather it involves tailoring solutions to meet particular needs. That proposition would be widely accepted and localism can play as part in ensuring the tailoring process succeeds and is responsive to local needs and circumstances. The vision of New Localism needs to be carefully specified in a way that recognises diversity in communities and a concern with equity issues. The argument is not for a romantic return to community decision making or a rampant ‘beggar by neighbour’ localism. It is about a key and growing role for local involvement in decision making about the public services and the public realm as part of a wider system of multi-level governance.

3.0

An East Midlands Approach to New Localism – Local Alchemy

This section introduces a brief background to the East Midlands economy and the East Midlands approach to new localism outlining the concepts of economic inclusion as new and innovative regional approach. It highlights the development of the economic inclusion development plan (emda 2001) and the subsequent development of Local Alchemy as an economic inclusion tool to reinvent local economies.

3.1

Background to the East Midlands Economy

The East Midlands is England's fourth largest region, covering an area of 15,607km2. It comprises six counties - Derbyshire, Leicestershire, Lincolnshire, Nottinghamshire, Northamptonshire, and Rutland. The region's main population centres are the cities of Derby, Nottingham, Leicester and Lincoln, and the towns of Northampton and Mansfield. The region has a population of 4.3 million, which is 7% of the UK total. About 9% of the East Midlands population is classified coming from an ethnic minority background. Population density in the region varies from around 70 per square kilometre in parts of Lincolnshire to more than 50 times that number in Leicester and Nottingham. The East Midlands is the third most rural region in England, with 29.5% of the population living in rural areas against an England average of 19.4 %( ONS 2004a, ONS 2004b). The labour market in the East Midlands is relatively stable but is characterised by the persistence of a ‘low pay low skill equilibrium’, where high employment rates are to an

extent maintained by a concentration of low pay low skill jobs. The East Midlands is the only region of the five Northern and Midlands regions with an above average employment rate (75.4% compared to 74.2% for the UK). The unemployment rate is relatively low (4.3% compared to 4.9% for the UK)(ONS 2005a). Despite this, average earnings are relatively low and there are a large number of people with no qualifications. In particular, the East Midlands significantly lags the national average in higher level qualifications, and has one of the lowest proportions of its workforce educated to degree level in the UK. This gap in skills performance is reflected in earnings levels, with individuals working in the East Midlands earning 6.6% less than the national average, only £17,713 compared to £18,961 in the UK (ONS 2005b). This is a consequence of the region’s industrial and business structure, which results in a comparatively weak demand for skills due to a large number of businesses competing principally on the basis of cost ( DTI/emda 2003). In 2003 there were some 263,000 businesses in the East Midlands, 6.6% of the UK total. Just over two thirds of businesses in the region have no employees (comprising sole proprietorships or partnerships comprising the self employed owner manager or a company comprising of only an employee director) and just over 30% have between 1 and 49 employees. Although they account for just 0.2% of the total, large businesses (those with 250+ employees) account for more than 45% of total employment in the region. Around one third of turnover in the region is accounted for by small businesses but just over 45% is accounted for by large businesses (ONS 2005b). Key manufacturing and primary sectors in the region which include Food, Drink & Tobacco and Transport Equipment and accounted for approximately 23.2 % of economic output which is well in excess of the UK average of 15.9%. The service sector is correspondingly relatively smaller than average in the region. The Business Services sub-sector does, however, account for a tenth of economic output in the region. There are a number of sectors in the region that have above UK average levels of productivity. These include: Agriculture, Forestry & Fishing, Minerals, Metals, Transport Equipment, Food, Drink & Tobacco, Construction, Wholesaling, Hotels & Catering and Public Administration & Defence (ONS 2004a). In 2003 Gross Value Added output per hour worked in the East Midlands was 96.9% of the UK average, up from 94.8% in 1999. On this measure the East Midlands is ranked fourth among the English regions behind London, the South East and the East of England; overall economic output based on Gross Value Added, was £61.7bn, approximately 7% of the UK total and regional economic growth in 2003 was around 2.2% in line with the UK average (ONS 2004a). The East Midlands has a diverse population, economic and social mix, ranging from relatively prosperous city-dwellers and commuters to pockets of serious urban and rural deprivation. Despite the region's improved economic performance over recent years there are many places which still have high levels of deprivation and low economic activity. An examination of data from England's Indices of Multiple Deprivation 2004 (IMD 2004) shows that the East Midlands' more deprived communities are located within its urban centres (Derby, Leicester, Lincoln, Nottingham and Northampton), the former coalfield areas of North Derbyshire and North Nottinghamshire and the Lincolnshire coastline and its rural hinterland. And it is recognised that some disadvantaged places require additional support and investment to realise the benefits of improved regional performance and to generate new and indigenous forms of economic activity.

The scale of this challenge should not be underestimated. Many disadvantaged areas have suffered from decades of decline associated with industrial re-structuring. Consequently, solutions to the needs of disadvantaged areas need to be sustained and integrated and enhance an area’s adaptive capacity: the capacity to respond to external forces on the one hand and, on the other, to create new paths of economic development from within. There are factors and characteristics common to the region’s deprived areas which need to be attended to, although the scale and relevance of these issues and the consequent solutions have to be location specific. Commonly, disadvantaged areas: • • • • • • • • • •

lack an extensive and diverse enterprise base; have weak market demand and/or market linkages to other areas; have a low skills base and low aspirations particularly amongst potential entrepreneurs; are perceived as a poor opportunity for private sector investment; are sometimes economically marginalised due to physical inaccessibility; have diverse cultural and industrial heritages; have poor quality physical and natural environments; have higher levels of health inequalities; and have higher levels of crime.

Many economically disadvantaged people also experience other factors which impact on their ability to enter and retain employment. Consequently, economic inclusion activities must be complemented by actions which address broader social inclusion barriers: childcare provision and assistance to people with other caring responsibilities; personal financial exclusion; availability of affordable and quality housing; health inequalities; and the effects of crime. Lack of participation in the labour market impacts on an individual’s standard of living and can be associated with other factors contributing to the experience of deprivation, such as poor health. Employability is about ensuring that people are prepared for the jobs that exist now and will exist in the future thereby reducing their vulnerability in the labour market. For some, simply getting a job will be the first step to getting a better job. Whilst the employment rate in the East Midlands is above the UK average this disguises pockets of severe labour market deprivation that exist within the region. The region’s economy also has a high proportion of jobs that are low skilled, low paid and require few or no qualifications. Evidence shows that 12.2% of the economically active, working age population have no qualifications, compared to 10.8% the UK average. This is a considerable challenge for policy makers, as all adults should be equipped with a basic level of qualification on leaving compulsory education. Although there have been marked improvements in the qualifications of young people leaving the education system in recent years, evidence suggests that the majority of people attain their highest qualification level before the age of 25. Given that skill requirements are expected to continue to increase in the future, combined with an ageing population and the prospects of a later retirement age, this means that there is a risk that older individuals with no or limited qualifications will

become trapped in a cycle of low-paid casual work and intermittent periods of worklessness and benefit dependency. As such, improving skills levels in the East Midlands is both important for the future competitiveness of the economy and for individuals to ensure that they adapt to changing conditions and sustain their employability. Interventions to increase the demand for and supply of skills are addressed in the Regional Skills and Productivity Plan but there are some groups of people who are under-represented in the labour market and face additional barriers and it is these who are addressed here. These groups include: ethnic minorities; people with disabilities and those on incapacity benefit; lone parents; people aged over 50; under 18s who are outside education or training, women and migrant workers, and people living in the most deprived areas, including those isolated by remoteness and sparsity. 3.2

Economic Inclusion – What is it? and Why?

In response to regional disparities in economic performance and activity, and the disparities that exist between different communities of interest (e.g., black and minority ethnic and homeless people), emda developed the concept of Economic Inclusion. Economic Inclusion is concerned with the economic dimensions of exclusion, such as poverty, joblessness, the lack of economic opportunities (appropriate to the needs of disadvantaged communities) and the lack of economic aspirations. Economic Inclusion describes the process of overcoming the barriers that prevent people from participating (and sustaining participation) in the economy. Economic inclusion is about ensuring people have the skills they need to become employable; assisting those in work to improve their skills; addressing inequalities in the region’s employment levels and ensuring that everyone has the opportunity to consider self employment as a career and lifestyle option. Economic inclusion recognises that employment is the single most effective means of tackling poverty and social exclusion. Work is at the heart of our society, and from it people gain self confidence and financial reward; those who work are generally in better health, have wider social contacts and a stronger sense of self-worth. The economic case for increasing and sustaining economic participation rates is strong. Ultimately, increasing participation reduces societal costs and increases aggregate economic gain. The logic here is that increasing participation in the economy has a number of positive effects: it improves an individual’s economic participation, productivity and prosperity; which leads to higher income levels and purchasing power. Economic inclusion also helps to address other elements of an individual’s experiences of exclusion; and, ultimately these positive impacts help to reduce societal costs (e.g. social security and jobseeker costs; costs due to ill health; costs related to crime; etc) all of which in turn help to boost the region’s economic performance. 3.3

Economic Inclusion Development Plan

The vision of an economic inclusion plan is to mainstream economic inclusion actions throughout the wider economic development activities whilst at the same time developing and catalysing innovative approaches to economic development which are designed to involve disadvantaged communities as both contributors to and beneficiaries of the region’s economic growth.

A core aspiration of the Economic Inclusion Development Plan is the creation of Enterprising Communities where: “a community successfully unlocks the entrepreneurship, initiative and creativity of local people so that they can create vibrant places to live, work and play within the context of inclusive and sustainable economic, social and environmental actions.” The Enterprising Communities approach has been developed to integrate the enhanced productivity and inclusion agendas. Too often, the enterprise and inclusion agendas are seen as separate and divergent policy areas. The Enterprising Communities approach recognises that disadvantaged communities house latent entrepreneurial talent and the potential for the development of new markets. Shaping and unleashing this talent has the potential to improve economic activity rates amongst the most excluded, whilst creating more and new economic wealth opportunities. As such, we believe that a successful enterprising community is one in which the following characteristics are present: §

Entrepreneurial Culture Enterprising Communities must be characterised by a ‘can do’ entrepreneurial culture. Not only do we need to work to improve the economic literacy of disadvantaged communities, but we must ensure that all aspects of the community embrace an entrepreneurial culture. This includes the voluntary and community sector and public agencies.

§

Enterprise Ecology An effective and successful local economy needs to have an appropriately diverse range of enterprises covering a range of different sectors and industries. As well as sectors, we need to ensure that there is a diverse range of enterprise size and operating structures such as micro, small, social and community enterprises. An effective ecology can also be characterized by heightened levels of collaboration and inter-relations between enterprises of different sizes and focus.

§

Business Support For an Enterprising Community to be effective it will also be characterised by responsive and appropriate levels of business support services. If disadvantaged communities are to become more enterprising then business support must be more focused on meeting their specific needs.

§

An Inviting Place Ultimately, we need to ensure that the community is physically attractive to its residents, its businesses and to those who may be attracted there. We need to arrest the trend whereby people in disadvantaged communities get a leg up the ladder and at the first opportunity move to a more inviting environment. Capacity, expertise and vision must be retained and realised locally.

emda’s commitment to achieving economic inclusion was well received throughout the East Midlands. However, many stakeholders commented that for an Enterprising Communities approach to work, then communities needed appropriate support and the tools to do the job.

3.4

Regenerating Disadvantaged Communities

Experience in the UK has shown through the decades of economic development initiatives, often targeted at the same communities that are as deprived now as they were 50 years ago, that the current approach is insufficient for true regeneration that results in long-term change. Discussions about economic development tend to focus on how much money has been awarded to an area and what programmes and services that money will fund – building a new centre, employment training workshops, business support services. Through the Economic Inclusion approach we identified that we needed to look further than this because regeneration funding entering poor areas frequently left those communities straight away in the form of contracts to non-local businesses and staff. The target area was left virtually untouched, save for a few capital improvements that continuously struggle to be financially viable, because the regeneration funding did not foster embedded enterprise links to sustain the community after the funding dried up. Attracting inward investment into disadvantaged areas is only half the equation when it comes to lifting socially excluded neighbourhoods out of poverty (Uctad 2001). The other half requires us to build linkages in a community to keep the money that was fought so hard to attract in, from leaking out straight away. This process can be likened to irrigation, and makes the concept of economic development accessible to the communities for whom this work ultimately matters.

3.5

Irrigating Local Economies with Inward Investment

Imagine a large area of desert with almost no vegetation. You want to make that land more productive. A large irrigation channel into that desert will certainly help to increase production along its banks. However, what should you do if you want to irrigate the entire desert area? Dig another large irrigation channel? Or dig some mini-channels off the existing large irrigation channel? So it is with money flowing into local economies. Inward investment could be seen as a large irrigation channel. Examples could be tourism income, the re-location into the area of a call centre or manufacturing plant or perhaps even the production of a Hollywood blockbuster? Getting this funding into an area is no easy thing – it often takes years of hard work, negotiating, marketing and fact-finding to start the money flowing. Local councils, tourism boards and economic development practitioners are experts at attracting such income into their areas. But once funding is flowing in, what should happen next to regenerate the areas that are still in effect economic deserts? Should these practitioners set about attracting in the next large inward investment? Or should

they, and the communities which they serve, make more of a concerted effort to dig mini channels from existing in-flows? Mini-channels could be anything that enables money to be re-spent locally. So, for example, when the local council decides to appoint contractors to renovate the public library, by appointing a local firm that employs people from that community it also ensures that it’s money is circulated locally and strengthens the local skill base and economy rather than appointing contractors from outside of the area.. Another example would be a community trust that develops an overall strategy to help increase the local circulation of tourism income. This strategy could include a linkage programme between farmers, restaurants and bed and breakfasts, as well as the development of a marketing firm staffed by local youth, thus helping to stem the ‘leakage’ of young people from the area whilst also retaining more of the tourism money. These are examples of how digging mini-channels off existing inward investment do require some creative thinking on the part of local people. Successful strategies to keep money circulating locally do not occur overnight and they do not happen, on the whole, naturally; they need to be facilitated in the early stages.

3.6

Building Local Economic Linkages by Digging Sustainable Channels

If we move back to our irrigation metaphor – who is it that ought to dig those minichannels? And who should then maintain them to ensure that the land is irrigated into the future? If our economic channel digging is solely in the hands of the policy makers or the inward investors, then it is probably not sustainable. Over time, these leaders will change focus to other priorities, and the channels will silt up. Instead, it is necessary to take a more facilitative and less protectionist approach to creating these mini-channels. When it comes to digging irrigation channels and mini-channels, an individual farmer would have tremendous difficulty accessing water from scratch without any support. Support can take the form of technical advice, training, access to finance or equipment, or perhaps even the creation by government of the first major irrigation channel into the area. Support should also be just enough for farmers to make that vital link to the water supply yet clearly ensure that the farmers have complete responsibility for maintaining the mini-channels and do not perpetuate cycles of dependency.

3.7

Making Enterprising Communities a Reality

Transforming desert into fertile land requires the various members of the community to collaborate in ways that draw on their strengths. Using this as a guiding principle, supported by the Economic Inclusion work, emda and the New Economics Foundation (NEF) identified that one way of addressing this need was the development and piloting of a local economic development suite of tools to help residents, businesses and public bodies work together in an integrated manner that builds on the respective skills of each sector to strengthen local economies. Local Alchemy was launched in December 2002

in four pilot communities and was extended out to a further ten communities in 2004. The approach aims to support communities across a three year period through a process of understanding the local economy, exposure to a wide range of potential options and tools for strengthening it, and the developing and delivery of a programme of action focused on strengthening the local economy (www.local-alchemy.net). 4.0

The Local Alchemy Approach

As highlighted previously, Local Alchemy was designed to answer the perennial question of how does a community become more enterprising? Using this ‘simple’ question as the foundation for the programme emda and NEF undertook an extensive feasibility study analysing different tools and techniques addressing this issues from across the globe. Selecting those tools that were felt to be the most appropriate for the circumstances a typical East Midlands community would face in its pursuit of entrepreneurialism, Local Alchemy prioritised two types of tools: Strategy tools - those focused upon supporting a community in developing a local economic action plan. The tools include proven techniques for: • • • • •

organisational development improving economic literacy undertaking a wealth check undertaking inclusive visioning action planning

Doing tools - once a community has developed a local economic action plan they will have a clear idea of what economic developments they could undertake. The doing tools element of the Local Alchemy programme contains examples of implementation tools which have worked elsewhere. Communities will utilise those tools most appropriate to their local conditions, their community capacity and future aspirations. The following are just some of the tools available: • • • • •

4.1

Time Banks (enhancing local social and entrepreneurial capacity and improving local inter-trading) BizFizz (enterprise facilitation for disadvantaged communities) Social Enterprise (various models for different market opportunities and local conditions) Main Street (a process based tool for communities to develop the high street of their town/village/etc) Mutual Support Networks (enabling collaboration between enterprises for mutual gain) From Tools to Modules.

During the development of the Local Alchemy programme it was recognised that a toolkit alone would not support communities to reach their enterprise goals. In order for any toolkit to be effective, especially in communities with low enterprise activity and

aspiration, a structured and supported approach would be needed. It was recognised that to be effective Local Alchemy would need to be developed in a modular fashion with emphasis on: • • • •

partnership working project management understanding enterprise (developing – and focusing on – enterprise culture) capacity building and social capital – in order to maximise the long term sustainability of the approach.

Over the initial twelve month development period for Local Alchemy this approach was developed into five key modules. MODULE 1. • • • • • •

Leadership and Participation

Identifying those who have an interest and capacity to lead and/or drive the process Developing relationships between local individuals and organisations (who may have similar goals but know little about each other) Catalysing ideas and energy Engaging people and organisations from all sectors: public, private, voluntary – and people from the community Challenging assumptions about possibilities and limitations in a positive way Laying foundations for promoting the enterprise culture (not as a way of ‘making money’ but as a way of developing new and imaginative ideas and solutions)

This module is delivered through a series of group meetings. For the first a lead partner needs to invite pre-identified individuals from the area who should be known community activists, representatives of faith groups, head teachers, council officers with a known interest etc. For subsequent meetings, however, the net should be thrown wider, but ideally limited to no more than 15 people. During this module it is vital to establish a solid foundation of ‘will’ behind any strategy to develop an enterprising community. MODULE 2. • • • • • • •

Understanding the Local Economy

Industrial decline and implications Enterprise ecology Existing markets and opportunities Money flows and job flows Extent and nature of informal economy Existing support infrastructure Existing assets

This module enables local people to make informed decisions on the basis of shared understanding and greatly reducing friction later on in the process. The ‘movers and shakers’ identified through module 1 engage with others from the community to explore for themselves the issues on which they need to have an opinion in order to progress.

MODULE 3. • • • • •

Opportunities in the Local Economy

Particular issues in the area The gaps in supply and demand (both internal and external) Employment opportunities Barriers (environment, crime, lack of skills etc.) What can we do?

After the first two modules which aim to lay strong foundations, this module is the start of the action process. It aims to begin to develop ideas about what could be done through enterprise (in its broadest sense) to improve their area and develop opportunities for local people. This module is best delivered through structured brainstorming sessions, starting very broad (what are the problems?) and moving slowly to ideas that look like they could be put into practice (this is what we can do…). Modules 1 and 2 should have laid strong foundations for this part of the process over which, inherently, there can be little guidance or control. An important element of this is to include more orthodox employment opportunities as a route for individuals: enterprise may well not be for all. The outcome should be a list of potential projects.

MODULE 4A. Realising the Ideas • • • • • • •

Grading the potential projects (existing, green, amber, red) Addressing barriers Capacity needs Accessing and shaping mainstream services Financing Human resourcing Property

This module is akin to orthodox ‘project appraisal’ techniques – but it should not be tarnished with that brush! This is about working out what will be the best way to expend effort, time and resources. This should begin with a sifting process of deciding which ideas should have time and effort spent on them: there may be existing projects and developing them may be the best use of resources; on the other hand there may be fantastic ideas that may need some other projects before them if they are to work; others may be unrealistic.

MODULE 4B. Getting On With It! This is not a module in it’s own right but is an inherent part of Module 4 and is something only the communities themselves can do in partnership with appropriate support. If the values of the programme are to be maintained it is important that the community are allowed to identify their own sources of support and make and learn from mistakes. Strong stakeholder intervention at this stage would likely create issues around ownership, dependency and longer term sustainability.

MODULE 5. • • • •

Is It Working?

Measuring Reviewing Exchanging, sharing and disseminating Optimisation and benchmarking

On the basis of shared information and understanding, individuals and groups within a community will have made decisions about where effort, time and resources should be committed. Circumstances are likely to have changed and people may not have got it right first time around. It is vital, therefore, that the process is reviewed. Those involved in the process should not just be those who went forward with implementing ideas, but all those involved in the initial process – and others ideally. Its focus should be making things even better – lessons learned, celebrating success and so on. 4.2

How is it delivered?

Local Alchemy has been designed as a packaged, repeatable, mainstream-able process which will allow deprived communities anywhere to achieve some or all of the above. Core to this are:

§

developing facilitator capacity in the region, both in supporting the delivery of the toolkit and in brokering and consensus building skills for work in stake-holder partnerships

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bringing together access to ‘learning packages’ of information and resources on existing enterprise development tools, including routes to choosing, funding and implementing them

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working with key local stakeholders (e.g., banks, employers, regeneration partnerships) to bend existing policies and practises to the economic needs of enterprise, and communities, in deprived areas

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working with key regional and national partners to create institutional space for targeting deprived enterprises while scaling-up and learning from the piloted approach.

The whole process has been designed to run with the minimal of resource requirements making it accessible to all communities. Unlike traditional regeneration programmes which invest large sums of money into disadvantaged communities, Local Alchemy is about unleashing the existing talents and resources that a community has and providing them with the skills and ideas to access and influence existing expenditure in their community. Communities participating in the pilot phase of the programme were resourced with the time of an enterprise coach or facilitator (up to 100 hours a year), a small budget to allow them to undertake some of the required tasks like holding meetings and doing survey

work and access to a small seed fund grant programme in order to kick start the implementation activities.

4.3

What will Local Alchemy Achieve?

The fundamental aim of Local Alchemy is to enable local communities to better understand how local economies operate and to take action to ensure that economic activities reflect and serve the needs of local people. As such, Local Alchemy might lead to any community-based activity which is designed to improve the economy and through this the lives of local people. To illustrate this point: a key element of Local Alchemy is supporting existing enterprise and increasing the number of businesses starting up. The visioning phase of the Local Alchemy process could reveal that one of the main opportunities for the community is to give more focused support to small business development. This could involve working with local business support agencies to create a one-stop shop business support unit which: §

provides low cost managed work space for budding local entrepreneurs

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provides local entrepreneurs with the skills they need to run their business

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links together local enterprises in buying and selling relationships

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provides small enterprises with advice about legal structures

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helps entrepreneurs access appropriate finance package to meet their start up or expansion needs

The one-stop shop could be generic, focusing upon all industrial sectors. Alternatively, dependent upon local conditions and opportunities, the business support unit could focus on a particular industry such as agricultural diversification in rural areas or tourism in coastal areas. Alternatively, the local community could decide that their initial focus should be on increasing the entrepreneurial capacity of the local people and getting more community focused businesses off of the ground. The Local Alchemy strategy could propose, therefore, to: §

develop a training programme for local residents to learn the core skills of entrepreneurship

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to establish a dedicated resource to help local people develop their ideas into robust business plans. This resource would then support local people in turning this business plan into reality with support in accessing finance, developing marketing material, finding premises, etc

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the local community could develop local redundant property into managed work space which would provide accommodation for these newly emerging businesses

The market focus of these businesses would depend upon the aspirations of local people and market competition, but communities could specifically develop enterprises which meet other identified needs in the local and adjacent areas; for example:

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a childcare co-operative run by local parents providing childcare services for local residents and those in adjoining areas

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an environmental social enterprise which works with local businesses to improve their waste efficiency and uses waste products as the source materials for other emerging enterprises

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a community garage which works with young disaffected people to improve their employability whilst providing a relevant service to local people

Other communities may focus upon improving the services available to their local community by setting up community companies in which local residents have a stake and provide services much needed in that local community; e.g.:

5.0

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post office and/or newsagents, grocers, etc

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a shop front credit union with sponsorship from bank or building society

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a chip shop, pub or other local amenity

Conclusion

The development of Local Alchemy as a product has not been particularly new or innovative. Those developing the programme have publicly maintained that much of the activity has been happening in disadvantaged communities across the world. In fact Local Alchemy was developed with the very clear mandate of ‘not reinventing wheels’. What does make Local Alchemy different to other regeneration programmes in the UK is that the power and decision making is very much at a local level where communities are given the tools and processes to invoke a new localism. NEF and emda continue to work to develop and refine the process and tolls throughout the pilot phase. It is their ambition that the programme will be mainstreamed across regeneration practitioners in time and that it will be available for any community to access and deliver. One key to the success of the programme will be the ability to mainstream and influence regional and national decision makers to buy into and have confidence in communities to take control of their economic destinies. This work is ongoing.

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